Hyundai Says it's Worried the Inflation Reduction Act Will Hurt its Growth

Building in the U.S. would take away profits they could make if they could just build their EVs in Mexico.

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Hyundai Ioniq 6
Photo: Hyundai

After President Biden signed the Inflation Reduction Act over the summer, only 15 electric vehicles still qualified for the full $7,500 EV tax credit. Hyundai, somewhat understandably, didn’t like that since none of its EVs made the list. Now Bloomberg reports the Korean automaker says that if the IRA looks like it’s going to hurt its growth, it’ll have to “reassess” its investment plans.

“If this continues to potentially hurt our growth, I think we’ll have no choice but to really reassess where we go,” Hyundai Vice President of Government Affairs Robert Hood said Thursday. “We don’t want to do that. The U.S. is so important to us as a company.”

Hood would really like it if the federal government decided that EVs built in Mexico could qualify for the full tax credit, which would help Hyundai boost its profits. “The price and the cost of labor and production and everything else is substantially cheaper in Mexico,” he said. In the meantime, Hood also said the U.S. should “delay everything” when it comes to implementing the IRA’s new tax credit rules.

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As Bloomberg notes, Hyundai will soon start building a $5.5 billion facility near Savannah, Georgia that will begin producing vehicles in 2025. It’s expected to create more than 8,000 jobs and will produce both EVs and batteries. But until it comes online, Hyundai won’t qualify for the tax credit. Hood also pointed out that with unemployment currently so low, “The biggest challenge going forward is finding those 8,000 Americans willing to come work in the plant.”

When asked for a comment, a Hyundai spokesperson told Bloomberg, “Hyundai Motor Group has made binding commitments to invest in and manufacture EVs in the U.S. However, HMG has raised concerns regarding the impact of the Inflation Reduction Act and is encouraging the Department of the Treasury to offer flexibility as it issues guidance on the legislation.”

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It’s possible Biden officials will agree to temporarily delay the new tax credit rules to give automakers more time to build factories in the U.S., but if not, it will certainly be interesting to see what companies such as Hyundai decide to do.